be excused. On account of the condition of his health he is not fit to be here. The motion was agreed to. BETHUEL M. KITCHEN.

Mr. HUBBARD, of West Virginia. Mr. KITCHEN is absent by leave of the House.

J. PROCTER KNOTT. No excuse offered. • Mr. INGERSOLL. Is it not in order to move that all gentlemen have leave of absence for to-night?

The SPEAKER. Each case must be treated individually, unless the call shall be dispensed with.

Mr. INGERSOLL. I doubt if there will be a quorum here to-night.

ADDISON H. LAFLIN.

Mr. FERRISS. Mr. LAFLIN is absent by leave of the House.

WILLIAM LAWRENCE.

Mr. WELKER. My colleague, Mr. LawRENCE, is absent on leave.

WILLIAM S. LINCOLN.

The SPEAKER. The gentleman from New York, Mr. LINCOLN, stated to the Chair this afternoon that he was called home on import ant business. The Speaker intended to ask leave of absence for him, but he was not in the chair this afternoon at any time when he could do so.

Mr. FARNSWORTH. I move that he be excused.

The motion was agreed to.

BENJAMIN F. LOAN. No excuse offered.
JOHN LYNCH.

Mr. PETERS. My colleague, Mr. LYNCH, was called to New York on very important business. I move that he be excused.

The motion was agreed to.

RUFUS MALLORY. No excuse offered. SAMUEL S. MARSHALL. No excuse offered. DENNIS MCCARTHY.

Mr. MOORE. The gentleman from Kentucky, Mr. McKEE, is sick and unable to be here. I move that he be excused.

The motion was agreed to.

ULYSSES MERCUR. No excuse offered. DANIEL J. MORRELL. No excuse offered. JOHN MORRISSEY. No excuse offered. WILLIAM MUNGEN. No excuse offered. LEONARD MYERS.

Mr. O'NEILL. My colleague, Mr. MYERS, is temporarily indisposed. [Laughter.] He expects to be here during the evening. I ask that he be excused.

Mr. INGERSOLL. I object.

Mr. O'NEILL. He is now outside the Hall, waiting to come in.

The question was taken on the motion to excuse Mr. MYERS; and it was not agreed to. CARMAN A. NEWCOMB. No excuse offered. JOHN A. NICHOLSON. No excuse offered. DAYID A. NUNN.

Mr. MULLINS. My colleague, Mr. NUNN, is absent by leave of the House.

SIDNEY PERHAM.

Mr. PETERS. My colleague, Mr. PERHAM, is absent by leave of the House.

CHARLES E. PHELPS. No excuse offered. WILLIAM A. PILE. No excuse offered. JOHN V. L. PRUYN.

The SPEAKER. The Chair was requested by the gentleman from New York, Mr. PRUYN, to state that the condition of his health is such that it is almost impossible for him to be here

at evening sessions. If there is no objection he will be excused.

No objection was made.
SAMUEL J. RANDALL.

Mr. O'NEILL. My colleague, Mr. RANDALL, is absent for the same reason as last night, when he was excused. He is detained on important personal business, and I hope the House will excuse him.

No objection was made.

GREEN B. RAUM. No excuse offered.
WILLIAM E. ROBINSON.

Mr. STEWART. My colleague, Mr. RoвINSON, has been in bad health for some months past. He requested me this afternoon to ask that he be excused this evening, if he should not be here.

No objection was made.

LOGAN H. ROOTS. No excuse offered.
LEWIS W. Ross. No excuse offered.
PHILETUS SAWYER. No excuse offered.
LEWIS SELYE.

Mr. VAN WYCK. My colleague, Mr. SELYE, has not been very well for some days past. ask that he be excused.

No objection was made.
SAMUEL SHELLABARGER.

I

Mr. BROOMALL. I move that Mr. SHELLABARGER be excused on account of the condition of his health. He was here last night, but he is not fit to be here.

The SPEAKER. The gentleman from Ohio, Mr. SHELLABARGER, and the gentleman from Pennsylvania, Mr. STEVENS, will be excused, if there is no objection.

No objection was made.

AARON F. STEVENS. No excuse offered. WILLIAM B. STOKES. No excuse offered. FREDERICK STONE.

The SPEAKER.

The Chair thinks the gentleman from Maryland, Mr. STONE, is absent on leave.

CALEB N. TAYLOR. No excuse offered.
JOHN TRIMBLE.

Mr. MAYNARD. My colleague, Mr. TRIMBLE, is absent on leave.

LAWRENCE S. TRIMBLE. No excuse offered. CHARLES UPSON. No excuse offered. HENRY VAN AERNAM. No excuse offered. DANIEL M. VAN AUKEN. No excuse offered. BURT VAN HORN,

Mr. VAN WYCK. My colleague, Mr. VAN HORN, of New York, has leave of absence.

The SPEAKER. His name will be excluded from the warrant.

ROBERT T. VAN HORN.

Mr. McCORMICK. My colleague, Mr. VAN HORN, of Missouri, is sick.

The SPEAKER. If there be no objection, Mr. VAN HORN, of Missouri, will be excused. There was no objection.

PHILADELPH VAN TRUMP. No excuse offered. HAMILTON WARD. No excuse offered. ELIHU B. WASHBURNE.

Mr. WASHBURN, of Wisconsin. I move that Mr. ELIHU B. WASHBURNE be excused on account of the condition of his health.

The SPEAKER. If there be no objection Mr. WASHBURNE, of Illinois, will be excused. There was no objection.

THOMAS WILLIAMS. No excuse offered.
JOHN T. WILSON. No excuse offered.
STEPHEN F. WILSON.

Mr. BROOMALL. It was stated last night that my colleague, Mr. WILSON, was absent on leave. I do not know whether such is the fact.

The SPEAKER. The Chair thinks it is the fact. The gentleman is certainly not in the city. His name will be omitted from the

warrant.

FERNANDO WOOD.

Mr. STEWART. I believe my colleague, Mr. WOOD, has leave of absence. I know he was obliged to leave the city on account of sickness.

GEORGE W. WOODWARD.

Mr. GETZ. My colleague, Judge WooD

WARD, is not at all well, and I hope he will be excused.

The SPEAKER. If there be no objection, the name of Mr. WOODWARD will be omitted from the warrant.

There was no objection.

Mr. SCOFIELD. I move that the gentleman from Ohio, Mr. BINGHAM, be excused. I He came from his room a short time ago. told me he was not well, and did not feel able to come up. He desired me to ask that he be excused.

The SPEAKER. If there be no objection, the gentleman from Ohio [Mr. BINGHAM] will be excused.

There was no objection.

Mr. INGERSOLL. Is it in order to move that those members who are reported absent, but who are now within the lobby, be admitted?

The SPEAKER. As the call is now operating, the House has ordered those gentlemen to be brought in by the Sergeant-at-Arms. The Speaker has just signed the warrant, and the Sergeant-at-Arms is now about to execute the order of the House.

Mr. WELKER. I have just come from the room of my colleague, Mr. DELANO, who stated to me that he was not able to be here to-night. I move that he be excused.

Mr. INGERSOLL. I hope that no more excuses of this kind will be offered. They will give this capital a bad reputation for healthfulness throughout the country. [Laughter.]

The SPEAKER. If there be no objection, Mr. DELANO will be excused.

There was no objection.

The Sergeant-at-Arms appeared and reported that, in accordance with the order of the House, he had arrested and brought to the bar of the House Mr. BENTON, Mr. CORNELL, Mr. CULLOM, Mr. ECKLEY, Mr. NEWCOMB, Mr. MYERS, Mr. SAWYER, Mr. STEVENS of New Hampshire, Mr. BEATTY, Mr. MERCUR, and Mr. HUMPHREY.

The SPEAKER. Mr. BENTON, you have been absent without the leave of the House; what excuse have you to render for your absence?

Mr. BENTON. I came as soon as I could. I arrived here at a few minutes to eight o'clock, and thought I was in time, but found the doors closed.

Several MEMBERS. The hour of meeting is half past seven.

Mr. BROOMALL. I move that the gentlemen who are now at the bar of the House under arrest be discharged on the payment of the usual fees.

Mr. ORTH. Five dollars each, and the usual fees.

Mr. BROOMALL.

Oh, no!

The SPEAKER. The motion does not preclude any member in arrest from having a separate vote on his case.

Mr. SCHENCK. Is it not proper to exclude from the motion those who were reported to be so ill as to be unable to be present, and yet are here now?

The SPEAKER. Sometimes gentlemen who are ill and so reported by their colleagues do attend night sessions. The gentleman from Ohio [Mr. SCHENCK] was reported to be ill, and yet is now present in the Hall. [Laughter.]

Mr. TWICHELL. I move those who are still outside and cannot get in also be discharged.

The SPEAKER. That cannot be done at present, and not until they are brought to the bar of the House.

Mr. BROOMALL's motion was agreed to, and the members named were accordingly discharged.

The Sergeant-at-Arms again appeared and reported that, in further obedience to the order of the House, he had arrested and brought to the bar of the House Mr. JONES, Mr. RAUM, Mr. UPSON, Mr. BARNES, and Mr. NICHOLSON.

Mr. BROOMALL. I move that they be discharged on the payment of the usual fees.

THE CONGRESSIONAL GLOBE.

LEAVE OF ABSENCE.

his room.

ARMY REGISTER.

INTERNAL TAX BILL.

Mr. ALLISON. I call for the regular order of business.

The House, under the order heretofore made, resolved itself into the Committee of the Whole on the state of the Union, (Mr. BLAINE in the chair,) and resumed the consideration of the bill (H. R. No. 1284) to change and more effectually secure the collection of internal taxes on distilled spirits and tobacco, and to amend the tax on banks.

by means of the provisions of the existing law, that the best mode we could adopt would be to provide for the payment of all taxes at the distillery warehouse when the spirits should leave it for any purpose whatever, and then provide|| a drawback for the amount of taxes that may be paid upon all exported distilled spirits, which would be all the alcohol and rum that is exported from this country.

June 24,

to be adopted in reference to distilled spirits either to be exported or under any circumstances removed from the distillery warehouse.

[Mr. LOGAN] proposes to abolish entirely the My colleague upon the committee rounded by proper guards in the law, and to whole export system through a warehouse surallow no exportation except of distilled spirits which shall have first regularly paid the tax at the distillery, and then, so as not to break down the export business altogether, to introduce what we have been for a number of years trying to get rid of as itself an opening to great opportunities of fraud, a system of drawback, so that the tax paid may be returned to the exporter.

I think the exportation of rum and alcohol is well guarded. This amendment provides that when either of the articles is exported from this country to a foreign port; before the drawback shall be allowed or paid on the warrant of the Secretary of the Treasury the evidence shall be furnished of the payment of the tax from responsible witnesses under oath residing at the place where the exportation takes place, and also at the place where the article|portation of liquors in bond. The present law lands after it is in the hands of the consignee.

Mr. WILSON, of Iowa. I desire to ask the gentleman whether or not he intends to include in the provision relating to drawbacks such alcohol as may be used in the manufacture of medicine and cosmetics which may be exported from the country.

Mr. LOGAN. The amendment includes all alcohol that is exported. That is my intention.

Mr. WILSON, of Iowa. After it has been used in the manufacture of medicine or cosmetics, is the provision broad enough to include that? I think it ought to.

Mr. LOGAN. No, sir, it does not; but I would have no objection to any gentleman proposing such an amendment. The section I propose thing of that kind. It is easy to provide for a to amend has no reference whatever to anydrawback on cosmetics and articles of that kind. But I think it is necessary to establish the principle whether we will allow exportation gentleman from Massachusetts, [Mr. BOUTin this way or under the amendment of the WELL.] I desire for a moment to give my reasons for objecting to the proposition of the gentleman from Massachusetts. He proposes to export these articles by giving to a few dis

Mr. LOGAN. I modify my amendment so it will read as follows:

SEC.. And be it further enacted, That from and after the date at which this act shall take effect there shall be an allowance of drawback on all rum and alcohol on which internal taxes shall hereafter be paid, equal in amount to the taxes so paid thereon and no more, when exported in good faith. The payment of said drawback to be made only when the evidence shall be furnished to the entire satisfaction of the Secretary of the Treasury by such person or persons who shall claim allowance of drawback, that such tax has been paid, and the said rum or alcohol so exported-landed, and delivered to the consignee or consignees at the foreign port to which it was exported, to be proved by the sworn testimony of responsible persons where exported from and exported to-the same to be paid by the warrant of the Secretary of the Treasury on the Treasurer of the United States out of any money arising from internal tax on distilled spirits not otherwise appropriated: Provided, however, That no claim for drawback shall be allowed on cither of the said articles which shall have been exported as aforesaid prior to the time at which this act shall take effect.

SEC.-. And be it further enacted, That if any person or persons shall fraudulently claim or seek to obtain an allowance of drawback on any article or articles aforesaid, on which no internal tax shall have been paid, or shall fraudulently claim any greater allowance or drawback than the tax actually paid thereon as aforesaid, such person or persons shall forfeit and pay to the Government of the United States triple the amount wrongfully or fraudulently sought to be obtained; and on conviction thereof shall be imprisoned in the penitentiary for a period not less than one nor more than ten years.

Mr. Chairman, I hope the committee will give me its attention while I explain my reasons for offering this amendment. Under the provisions of the bill, inasmuch as we have provided that the tax shall be paid at the distillery warehouse, that presupposes that we will provide some way for the exportation of such articles of distilled spirits as are exported. There being nothing of the character exported save rum and alcohol, I thought, rather than to allow the taking from bond for redistillation and exportation, in order to guard against many of the frauds that have been perpetrated

But

Now, sir, I desire to call the attention of the committee to this whole subject of the trans

is exceedingly loose upon that subject. The
present law authorizes, with few or no guards,
very insufficient guards and regulations, liquors
to be taken in bond without payment of tax
from the distillery to what is called warehouse
"B," and to be transported from warehouse
to warehouse, from district to district, and
from one extreme part of the United States to
another, almost without limitation as to the
number of transfers, thus opening the door to
enormous frauds, which frauds have been in
numberless instances shamefully committed,
evading payment of the tax and injuring the
revenue of the country.

So great the evil grew to be that the Com-
mittee of Ways and Means introduced into
this House in January last, as one of the first
revising the law, a stoppage, for the time
expedients, while they should be engaged in
being, of all removals of whisky, without the
payment of tax, from bonded warehouses.
the House, and afterward passed the Senate,
That was passed almost unanimously through
and is now upon the statute-book. But what
did all that mean? Some construe it to have
properly meant an intention to break up the
whole bonded-warehouse system, as incapable.
of reform. Others, and I among them, under-
stood it to be a temporary expedient by which
this loose system could be broken up and
entirely interrupted until some revision of the
be accomplished. Now, if the object be to
law should take place by which reform could
utterly destroy everything like the removal of
liquors in bond under any circumstances, the
course is plain for this House, and some such
provision as that proposed by my colleague on
the committee ought to be adopted. If, on
the other hand, it is not to be destroyed, but
to be regulated, then I think we have accom-
plished it pretty effectually in the bill which is
before the House.

Now, then, what is to be the result of all
this? I claim that there is a general outcry
against the whole bonded system, founded upon
actual abuses which have been committed,
which is running into the mistake of destruc-
perfectly capable of revision and reform, re-
tion instead of reform, and that it is a thing
straint and regulation, under such circum-
stances as will make it an efficient help to the
revenue of the country, and at the same time aid
not permit, under
the general business of the country. If you do
any circumstances and that
seems to be your present conclusion-distilled
spirits to be removed, say from the West to the
East, without payment of the tax in advance,
how will it operate? Here is a western man,
a trader or distiller, a manufacturer, who has
on hand $10,000 worth of whisky, say ten thou-
sand barrels, or ten thousand gallons, to bring
it within more probable limits.
twenty cents to produce it, which is $2,000.
It cost him
ing to the $2,000 in value $5,000 more of tax,
He cannot put it upon the market without add-
rating the tax at fifty cents.
under these circumstances the trade will be
I predict that
driven to the East, and it will not be a year
for some provision by which they shall not be
before the western interest will be clamoring
called upon to advance twice and a half the

value of their production in order to get it to market.

[Here the hammer fell.]

Mr. LOGAN. I will withdraw my amendment to the amendment, in order to give some gentleman who desires to be heard an oppor tunity to renew it.

Mr. HOOPER, of Massachusetts. I renew the amendment to the amendment, and yield my time to the chairman of the Committee of Ways and Means, [Mr. SCHENCK.]

Mr. SCHENCK. My colleague upon the Committee of Ways and Means [Mr. HOOPER, of Massachusetts] gives me his time, which enables me to finish what I desired to say. I say that I have no doubt the effect of this proposition will be that the western trader or distiller, finding that he cannot afford the amount of capital that he can employ and handle and advance twice and a half the price of his product in order to get it to market, will be compelled to sell out at a disadvantage to some one who can afford to lay out so much money, to some one who is a capitalist and comes from the East to speculate in those spirits, and who will expect in return to drive him down to the lowest possible living price for the article which he produces. Thus the whole will operate to the benefit of the capitalist rather than to the man who produces the article. Such will be the effect of the proposition that eventually, and probably within twelve months from this time, if we pass a law under this impulse which now seems to prevail, to break up everything like transportation in bond, we will have the whole West clamoring for a renewal of the bonded system. The man who has to advance $5,000 in order to get $2,000 worth of his product to market must lay out of the interest of his money until he gets that to market, must be subjected to all the losses and incidental expenses, until finally, when he does succeed in making a disposition and sale of his property, these incidental expenses will pretty much eat up the original cost of the article, or at least that proportion of the amount for which it sold which was likely to be profit.

Now, meeting this question, and seeing the determination not to have any removal generally of spirits in bond without the prepayment of the tax, the committee have sought to provide at least a system by which the export trade of the country might be kept up by a good and complete machinery of bonded transportation, upon which subsequently might be ingrafted, if thought proper, by future legislation, some restoration of that which I think will be demanded particularly by the western part of the country. We have provided that at least distilled spirits may go forward from the distillery warehouse, under careful restrictions, where they are actually intended for exportation and are really exported. We have made an exception in favor of those manufactured compounds into the production of which spirits mainly enter, in order that we may save that much toward our foreign trade.

And here I will remark in passing that, among other houses, there is a single house in New York city which exports some four hundred and twenty thousand dollars' worth annually even of what may be considered the insignificant article of cosmetics, getting their distilled spirits in this country without the payment of a tax, because it goes abroad, being able to compete with the French and other manufacturers so as to push their goods out of the market. So in regard to the distillation of || alcohol, the production of rum and all forms of distilled spirits in which that article goes abroad to any extent; we compete with all Europe in our redistilled spirits, in our alcohol used extensively in the arts, used for the production of that brandy by mixture which they send back to us and pay a high duty upon. We crowd out the alcohol of Europe; and that trade is continually increasing.

Now, I think my colleague on the committee [Mr. LOGAN] is mistaken. I know how strong his opposition is to anything like the transportation of spirits in bond. I think gentle40TH CONG. 2D SESS.-No. 217.

men are generally mistaken who suppose that the system of transportation provided for in this bill is the present system at all. It is surrounded by such guards, such restrictions in respect to removal from one place to another, a single removal, the route to be selected, the guards along the route, the bonds under which it is to be done, the forms to be observed, that it seems to me it is impossible by any human calculation or ingenuity to make such frauds possible as are now committed.

[Here the hammer fell.]

Mr. HOOPER, of Massachusetts. I withdraw my amendment to the amendment.

Mr. LOGAN. I renew the amendment to the amendment. I desire to occupy the attention of the committee for a few moments; and I hope the chairman of the committee will not think that my opposition to this bonded system is actuated by anything except a desire to arrive at that which is right. But I wish to call the attention of the committee to one of the arguments presented by the chairman. If this bill is designed to provide for exportation only, very well. Then I ask the chairman to tell me why he uses all through the bill the words "distilled spirits?" "Distilled spirits" includes whisky; it includes crude spirits; it includes high wines and alcohol and rum. This bill, then, allows the transportation in bond of whisky, alcohol, high wines, crude spirits, and rum. Now, sir, I want the committee to understand that we do not export any of these articles, except alcohol and rum; and when you provide for transporting for export that which is never exported you hold out to the country an inducement that is a false inducement. I do not mean any intentionally false inducement. Gentlemen say the provision can be easily changed." I understand that, and I propose to change it.

It is said that the West will be howling here next session for transportation in bond. You have already provided in this bill for the transportation in bond of any kind of distilled spirits for exportation. Then, again, spirits may be taken out of the warehouse for redistillation. Now, if this is not the old law over again, except that there are a few additional guards, I do not understand the matter.

Mr. SCHENCK. It only goes from the distillery.

Mr. LOGAN. I understand that. You allow it to be taken out of the distillery warehouse for redistillation. There is one chance for fraud by stealing the whisky. Then you allow it to be returned. There is another chance for fraud on that trip. Then you allow the liquor to be transported to New York, Philadelphia, or Boston-for what? For exportation. There is another chance for fraud. Thus, by the provisions of this bill, you allow the liquor to go all over the country. Now, I propose to adopt what seems to me fair dealing with the country. I propose that we shall permit rum and alcohol to be exported, because these are all of this class of articles that ever are exported. If we intend to allow only the transportation in bond of that which is to be exported, and want to deal fairly with the country, let us say so in this bill. It is useless to tell the western people that they can transport in bond for exportation. They will understand perfectly well that they can export just as they have done heretofore; and so will everybody else. But how was it that your whisky got on the market when it was transported from Peoria, from Dubuque, from Chicago, and from everywhere else to New York. How was it? Why, some of it was transported perhaps for exportation, some for one thing and some for another; some perhaps to be used in the preparation of cosmetics. Yet that liquor got on the market, and the Government lost the tax, just as it will if you provide by this bill for transportation in bond. We have now in bond some twenty-five million gallons of whisky, the tax on which under the present law is $50,000,000. Under the reduction of tax proposed in this bill the tax would amount to $12,500,000.

Now, I propose that drawbacks shall be paid on that only which is exported and nothing else; and I say that if the Government were to pay $5,000,000 on this whisky, and then throw it into the canal down here or into the river, not a gallon being exported, the Government would make money by the operation. The Government has, during the last twelve months, lost over one hundred million dollars by transportation bonds and bonded warebouses. This is well known to gentlemen of the House. We ought to have realized the tax on at least one hundred million gallons, which would have been $200,000,000. How much have we realized? Fourteen million dollars. It is said that the two-dollar tax cannot be collected. But why has it not been collected? Because the whisky got on the market by virtue of fraudu. lent transportation bonds, by virtue of bonded warehouses, by virtue of transportation from one part of the country to another. If you want to reenact the same scenes and deprive the Government of $100,000,000-for out of this you will not get more than forty or fifty million dollars-if you want to deprive the Government of this revenue reënact the old bonded warehouse system, call it by what name you please, and you will have the same frauds you have had for the last eighteen months. [Here the hammer fell.]

Mr. ALLISON. I rise to oppose the amendment, and I wish to call the attention of the gentleman from Illinois to a defect in his amendment.

Mr. LOGAN. If the gentleman will allow me, I wish to state that I have two amendments, one I think at the suggestion of the gentleman from Iowa. I will read them, and will, if gentlemen desire, let them go with my substitute. Add to the first section of my amendment:

Provided, also, That a deduction of five per cent. shall be made from the amount of drawback herein allowed.

Then, again, insert before the word "provided" the following:

And in like manner a drawback shall be allowed upon all alcohol and rum used in the manufacture of medical preparations, compositions, perfumery, cosmetics, cordials, and liquors, under such rules and regulations as the Commissioner of Internal Revenue shall prescribe.

Mr. ALLISON. Does the gentleman modify the substitute as he suggests by those two amendments?

Mr. LOGAN. I do not. I merely wish to show the amendments of the substitute that have been suggested to me.

The CHAIRMAN. The pending proposition is the substitute moved by the gentleman from Illinois. Does the gentleman withdraw it?

Mr. LOGAN. I do not. I am willing to modify it so as to make it more effective if possible.

The CHAIRMAN. It cannot be modified unless it is withdrawn.

Mr. ALLISON. I am opposed to the amendment of the gentleman from Illinois. I have a proposition, which I will hereafter move, providing this drawback shall not exceed fifty cents per gallon. He has the extraordinary proposition here that we shall refund upon any kind of exported spirits all the taxes paid thereon. I should like to see any man who can tell what the taxes are that under this amendment will be refunded.

Mr. Chairman, I believe we all agree upon the general proposition that some method should be ascertained whereby we can protect the interest of those who in good faith are the exporters of distilled spirits. But I wish to say to my friend from Illinois, [Mr. LOGAN,] when he attacks the principles of this bill and proposes to substitute his drawback system in my judgment he opens the flood-gates of fraud. He seems to ignore in his entire argument that we have provided a stamp for distilled spirits by which it will be impossible to transport them unless they have paid the tax except on a designated line of transportation to a port of entry. Any detention or diversion from this line would at once render them liable to seizure for want of the tax-paid stamp; no one would

buy them for consumption because they could not be put upon the market. My friend ought also to know, when he charges the committee with perpetrating a deception upon this House

Mr. LOGAN. I beg the gentleman's pardon, I have not charged anything of the kind.

Mr. ALLISON. I understood him to say that the words "distilled spirits," used in this bill, are a deception. I know, and I presume most of the members of this House know, that alcohol is distilled spirits, and everything that contains the element of alcohol, when it comes from the processes of distillation known in the markets of the world. I say when we use the words "distilled spirits" we use the exact and proper words. I agree with my friend that we should adopt some means by which these frauds should be prevented. In my judgment his proposition is not the true method, and if we cannot transport distilled spirits from Chicago, Peoria, and Dubuque to New York without reopening the flood-gates of fraud, then every gallon should pay the tax at the distillery warehouse, without any exception or limitation whatever, and let our exportations of this article entirely cease. It is a small business compared with the interest at stake in this question of collecting the tax on distilled spirits.

Mr. WILSON, of Iowa. I desire to ask my colleague a question.

Mr. ALLISON. I will yield if you will make it short.

Mr. WILSON, of Iowa. Do I understand by this bill that spirits may be transported in bond for any other purpose than exportation and use in the manufacture of medicine and other articles?

Mr, ALLISON. I know very well what my colleague proposes to follow with that question. There is no proposition here to allow transportation in bond except for exportation to foreign countries and for the manufacture of cosmetics, perfumery, cordials, &c., which shall afterward be exported, and when we come to that I shall move to strike it out. It opens the door for the perpetration of the worst species of fraud that can be perpetrated in this article of distilled spirits. I have been informed that one house in New York has exported six thousand barrels of brandy to the Mediterranean coast, which was little else than water, under the protection of the one hundred and sixty-eighth section of the present law, which is to some extent reënacted in this bill. This brandy was almost valueless when it arrived at the foreign port, and doubtless represented six thousand barrels of distilled spirits put on the market in this country without the payment of any tax whatever.

[Here the hammer fell.]

The CHAIRMAN. Debate is exhausted on the amendment to the amendment. Does the gentleman from Illinois desire to modify it before the vote is taken?

Mr. LOGAN. No, sir.

Mr. INGERSOLL. I ask my colleague to withdraw it and let me renew it.

Mr. LOGAN. I will modify it, at the suggestion of several gentlemen, by inserting after the word "thereon" the words "not exceeding fifty cents per gallon on each gallon of proof-spirits," and by striking out the words "and no more ;" so that it will read as follows:

That from and after the date at which this act shall take effect there shall be an allowance of drawback on all rum and alcohol, on which any internal taxes shall hereafter be paid, equal in amount to the tax so paid thereon, not exceeding fifty cents per gallon on cach gallon of proof-spirits, when exported in good faith.

Mr. INGERSOLL. Is it in order to move an amendment?

The CHAIRMAN. It is not.

The question being taken on the amendment, as modified, there were-ayes 48, noes 45; no quorum voting.

Tellers were ordered; and the Chair appointed Messrs. LOGAN and ALLISON.

The committee divided; and the tellers reported-ayes 52, noes 46.

So the amendment of Mr. LOGAN was agreed to.

The question recurred on the amendment of Mr. BOUTWELL as amended.

Mr. BROOMALL. I move to insert at the end of the first section the following additional proviso:

And provided further, That the whole amount of drawback allowed shall not exceed the entire amount of tax collected.

I am afraid the drawback will exceed the

entire tax.

Mr. LOGAN. I hope it will not be adopted. The amendment to the amendment was disagreed to.

Mr. INGERSOLL. I am opposed to the principle embodied in the pending proposition; but if we must pass it I desire this amendment to be added to the section:

And provided further, That there shall be allowed and paid to the exporter, in addition to the drawback, interest on the amount of the drawback at the rate of six per cent. per annum for the time the tax shall be held by the Government.

If the proposition of my colleague [Mr. LOGAN] is to prevail I hope this amendment will become a part of the section for the benefit of this interest. From the legislation that we have had here to-day it would seem to me to be the intention to break down the manufacture of distilled spirits in this country altogether, including the exportation of alcohol to foreign countries, and to transfer the production of distilled spirits to Canada, allowing Canadian smugglers to supply this country with that article. Under the thirty-third section of this bill, which was not stricken out on my motion to-day, as it ought to have been, I maintain that no house that distills five hun dred bushels of grain a day can continue to do business. The thirty-third section provides that the distillery shall remain idle two days out of the seven.

Mr. SCHENCK. Oh, no.

Mr. INGERSOLL. It provides that the distillery shall go out of blast at eleven o'clock on Saturday forenoon.

Mr. PRICE. Oh, no; on Saturday night. Mr. SCHENCK. One hour before midnight. Mr. INGERSOLL. Let me see; I have the section here. The gentleman is right; it is not quite so bad as I thought it was. It says at eleven o'clock in the afternoon. That is rather a queer way to state it. However, it requires the distillery to cease operations for one whole day, from Saturday till Monday. Now, a distillery that is distilling fifteen hundred or two thousand bushels a day will feed four or five thousand hogs and five hundred head of cattle, and it is not expected to go out of blast from November until the following May. You require that the cattle and hogs shall fast" one day out of seven. [Laughter.]

Mr. PRICE. Will the gentleman allow me to ask him a question?

Mr. INGERSOLL. I cannot be interrupted. Mr. PRICE. I would like to know if the hogs could not eat something else that day? [Laughter.]

You are destroying an interest which might be rendered profitable to the people of this country and put millions of dollars into your Treasury.

Why, Mr. Chairman, if we did not get one dollar of tax out of the exportation of alcohol it would be well to encourage it. When we cannot export our corn or grain with profit on account of its distance from the sea-board and into alcohol; and a package which would only its great cost of transportation, you can distill it carry four bushels of grain in bulk will carry to market, put into alcohol, what would be equivalent to twenty bushels of grain. Then it goes into the markets of the world in foreign countries and pays our debts, and pays for goods which we wish in exchange for it. But by this bill you put such expensive restrictions and burdens upon the export trade that you cannot export one single gallon out of the country under this law at a profit to the exporter or manufacturer.

[Here the hammer fell.]

Mr. SCHENCK. Mr. Chairman, I wish I felt able this evening to talk more to my own satisfaction in regard to this matter. I shall oppose the amendment_offered by the gentleman from Illinois [Mr. INGERSOLL] because it relates to an extension of the drawback system, and I think the whole drawback system a mistake.

There

Mr. INGERSOLL. I said so, sir. Mr. SCHENCK. I know you did. is a question now distinctly made between the provisions of this bill and the amendment offered in several sections by the gentleman from Illinois, [Mr. LOGAN,] and I confess, without any feeling about the matter at all, I prefer to stand by the bill. I believe it is a more complete, well-digested system, and will accomplish more good and give more safety than that which is proposed in lieu of it. I impeach no gentleman's purposes either upon one side or upon the other, but I say this, that in my opinion the outcry against a bonded system of any kind, against the removal of spirits at any time anywhere, has been carried so far, occasioned as it was by the enormous frauds committed, that gentlemen have run into an infatuation almost, as it appears to me, on this subject, and are not for reforming now, but for utterly destroying a system to which I think they will hereafter come back to a certain extent if they should now destroy it.

This drawback system is one that has been as open to frauds as any other. I believe the records and statistics of the custom-house, in regard to all instances where drawbacks have been allowed of taxes paid upon manufactures and goods, will show that they have contrived by false oaths and otherwise to draw back more taxes than have ever been paid on those goods. And it was rather a significant vote of the Committee of the Whole a few moments ago on the amendment to prevent paying out of the Treasury more money for drawback than these parties have paid into the Treasury for taxes. Now, this has been sought to be limited by keeping back five per cent. for the expenses incident to the system. That, however, has been abandoned entirely by the proposition made by the gentleman from Illinois, [Mr. JUDD.]

Now, what is it that the bill proposes? So far as the removal from distillery warehouses without the prepayment of the tax is concerned we have given up the removal of liquors which are to be consumed or used in the United States. As I said before, I think it not impossible that at least the western interest will hereafter be found calling for the restoration of the bondedwarehouse system in some degree and in some respects, for reasons which I have assigned. But all that is given up by this bill. What is sought to be saved by the carefully prepared section in regard to removal at all? Why, that there may be removal for actual trans

tillation, to go back again into the distillery warehouse, the redistillation to be in the district. This is so that alcohol may be sent abroad; and so in regard to other compounds,

manufactures of the country, of which distilled spirits is the principal component part.

แ

The gentleman from Illinois [Mr. LOGAN] complains that we use the term "distilled spirits" in the bill; and he wants to know why that term is used. Simply because this is an act in relation to "taxes on distilled spirits." I do not know that I can answer the gentleman in any other way than a Dutch friend of mine answered a like question. He said to a neighbor of his, "Meinherr, can you tell for what I calls my little poy Hans?" His neighbor replied, Well, no; I really don't know." "Vell, the reason I calls my little poy Hans is because his name is Hans." [Laughter.] We call this "distilled spirits" because it is distilled spirits; because that is the generic term which embraces all articles of the kind, including rum, alcohol, crude whisky, and everything of the kind. Now, it may be that, departing from the language used in all the rest of the bill, you might use the words "alcohol and rum." And if it is more pleasing to the gentleman to confine this transportation for exportation provided for in this section to the specific articles alcohol and rum I do not know that I would oppose it, although it would be a departure from the general generic term used throughout the bill. I know, as well as the gentleman from Illinois [Mr. LOGAN] does, that crude whisky is rarely exported. It is only after it is redistilled and converted into alcohol that it is found profitable to export it. I know that so far as crude spirits are concerned they are not transported except in the shape of rum.

[Here the hammer fell.]

Mr. INGERSOLL. I withdraw the amendment to the amendment.

Mr. EGGLESTON. I renew it. The dif ficulty-and there is really not much difference between the views of the majority and the views of the minority of the Committee of Ways and Means upon this question-the difficulty is this: one party proposes that ardent spirits or distilled spirits, including everything else of the kind, shall be transported in bond throughout this country.

Mr. SCHENCK. Only for exportation; not throughout the country.

Mr. EGGLESTON. From the place where it is manufactured to some export warehouse; and that will take in the entire length and breadth of the country. Now, I am opposed to that for the reason that it cannot be done with out frauds being committed. It is said that the people of the West will have a chance to send their goods to New York or Philadelphia or New Orleans for exportation; and that thus they will have an equal chance with dealers on the sea-board. But, Mr. Chairman, why should we want to export distilled spirits at all? I ask my good temperance brethren here, whether the object is to build up a foreign trade in this article? Are they willing to go on the stump and say that while this article has so bad an effect upon the people of this country they want to have it manufactured in large quantities to be sent abroad? I know that the object of spreading our trade over the world is to build up the interests of this country; but I throw out this hint for the benefit of those whom it may concern. If, however, you are to send distilled spirits abroad, I say let it go from the seaports, and let the duty be paid there, and let the drawback be paid there, if there is to be a drawback.

But, sir, I am opposed to drawbacks. I want this bill put in such a form that there shall be no transportation of this article in bond, and that there shall be no drawback when the article goes to a foreign country. Thus we shall have a home market for the article. I say to my brethren of the West that we can gain nothing by transporting this article in bond. Alcohol has never been shipped in any great quantities from the West to the East for exportation. I venture to say that in the district of the honorable chairman of the Committee of Ways and Means there is

not one distiller who sends whisky to the seaboard for exportation. There are one or two establishments in Cincinnati that send whisky to the East for that purpose, but they do not export it. It is sold to New York speculators and jobbers, and they do the exporting. I know that there are parties in New York who, since this great cheating in whisky has been going on, have been buying illicitly-distilled whisky and getting the drawbacks upon it; and they have in this way been rolling up their wealth by millions. I could in this connection mention some names. The money has been made by, in the first place, stealing the whisky or buying it for a mere song, and, in the second place, getting the drawbacks upon it. As I have already remarked, I think we had better make a clean sweep in this matter. We want no bonded whisky. What we want is that every distiller, when he moves the whisky from the bonded warehouse in his vicinity, shall pay down the money. Let the tax be paid, and then let the party take the whisky where he pleases. But let us not reinaugurate this bonded-warehouse system.

I yield the remainder of my time to the gentleman from Illinois, [Mr. INGERSOLL.]

Mr. INGERSOLL. Mr. Chairman, I wish to say, in reply to the gentleman from Ohio, [Mr. EGGLESTON,] that such restrictions as he proposes to put upon this trade would kill it entirely. And how would we derive money from whisky if none were made in this country? I desire to make a further statement. In Chicago or Peoria an alcohol establishment will make one hundred barrels of alcohol in a day.

Mr. EGGLESTON. How much have they

made?

Mr. INGERSOLL. They have made that quantity, and they can make a great deal more. An alcohol house which produces one hundred barrels a day will, at the end of three months, have produced nine thousand barrels, making, at the rate of sixty gallons to the barrel, five hundred and forty thousand gallons, upon which a tax of fifty cents a proof gallon would make about three hundred thousand dollars. The cost of production is $540,000 more, making a total of $840,000. Now, suppose that the manufacturer exports this alcohol. Six months will be required for the receipt of the evidence that the alcohol has reached the port to which it was shipped. The manufacturer makes his application for the drawback; and it is reasonable to suppose that he will not get it within less than from six to nine months from the time he commences the production of the alcohol. So that a capital of $840,000 will be required to produce nine thousand barrels of alcohol for the export trade; and the manufacturer must be deprived of the use of this amount of capital for from six to nine months. It is evident that under such conditions the business must be abandoned in this country. [Here the hammer fell.]

Mr. JUDD. Mr. Chairman, it is very desirable that this committee should take its reckoning and ascertain where they are, so that no side issue which does not really belong to the question shall be allowed to divert their attention from the real issue. Now, this committee in its morning session adopted an amendment to the first section of the bill declaring that distilled spirits should not be removed from the distillery warehouse until the tax was paid thereon, and there was hardly a vote against the proposition; at any rate there was no contest upon the question at that time. Whether this was occasioned by a belief that the subsequent sections of the bill would neutralize the amendment so adopted I do not know. My object, Mr. Chairman, has been to get a direct vote and settle the question whether we are again to establish for any purpose the business of the transportation of distilled spirits in bond. This proposition was declared to be in opposition to the business of exporting distilled spirits, and that by it a branch of trade would be destroyed. Although not believing

in this proposition, I was willing to join in any proper legislation or any amendment that would obviate this supposed hardship.

The gentlemen who believe in protecting the exporting interest in this country, and think it would be destroyed by the regulation adopted, made very great complaint; and to remedy that complaint my friend from Massachusetts [Mr. BOUTWELL] offered an amendment that he thought would accomplish the object and at the same time afford protection against the frauds perpetrated in transportation. Following in the wake of this supposed necessity, and to obviate the objections urged by the gentlemen who were afraid of destroying the export trade, my colleague [Mr. LOGAN] introduced this drawback system, so that by removing this objection the principle might be maintained of collecting revenue at the place of manufacture, not because he believed there was not a possibility of perpetrating fraud under it; not because it was a perfect system, but because he desired to adhere to the principle that the Government could not get revenue without collecting the tax on distilled spirits at the distilleries. I say, then, that there is no issue as to the fraudulent nature of action under the drawback system but that does not reach the real issue presented here; the drawback is only incidental to the other question. I do not care whether there is a drawback law passed or not. My object is to collect the tax at the place where the article is manufactured.

Mr. SCHENCK. That is in the bill.

Mr. JUDD. In the original bill; so I understand. I do not desire that the gentleman should make any side issues with me. The question of alleged frauds in all drawback systems must not be allowed to keep from view the real question of where tax shall be collected; but in this bill there is permission under which all distilled spirits manufactured at all the distilleries in the United States, every gallon of it, can go to a port of entry without paying a dollar of tax; that is, if the parties comply with the provisions in this bill, claiming that it is for exportation. You get it there under the claim that it is for exportation, and leave it in the hands of such officers as have dealt in distilled spirits heretofore.

Mr. SCHENCK. Will the gentleman permit me to say that he states what is not in the bill. The provision is that it shall only go to the warehouse when intended for exportation, and it prevents fraud in preventing it going out for any other purpose than exportation. It has to be exported within a given time or else it will be forfeited.

Mr. JUDD. I hope this does not come out of my time. I repeat my statement, the chairman's statement to the contrary notwithstanding, that every gallon of distilled spirits made in distillation in the country may, under these provisions of the bill, be transported from the warehouse at the distillery to any port of entry in the United States, thus subjecting it to the contingencies and frauds connected with inland transportation. It is these contingencies that I would guard against by collecting the tax before it starts.

Mr. SCHENCK. In bond.

Mr. JUDD. Why, the gentleman has in his committee-room counterfeit, forged, fictitious, false, and fraudulent bonds given under the old law to secure safe transportation and the revenue that are not worth the paper they are written upon. While your restrictions in this bill are stronger and additional security is given, the opportunity is left.

Mr. INGERSOLL rose.

Mr. JUDD. I cannot yield now. I cannot submit to further interruptions. I will repeat again that the distilled spirits manufactured in the West can be all moved to New York if the claim is set up that it is for exportation. The gentleman provides by his bill that it shall go abroad, but that will depend, first, upon whether it ever gets there; and second, upon what officers you have to execute the law. If they are anything like the officers we have had